Corporate Governance refers to systems and processes put in place for the purpose of effective control and management of companies and firms. The central purpose of corporate governance is to strike a solid professional relationship among the board, directors, managers, employees, customers, and stakeholders.
Objectives of Corporate Governance
1. Protect the interests of shareholders – this includes safeguarding against mismanagement of an institution’s resources while maintaining the interests of shareholders, the government, and the community.
2. Compliance management – ensures business practices and legal frameworks are adhered to.
3. To promote growth – continued review of corporate measures, policies, and statutory rules improves the corporate bottom line.
4. Separation of Power – separation of ownership and power is achieved. This reduces conflicts of interest within institutions.
The component of corporate governance presents organizations with a lot of benefits. A governance framework is critical in achieving the benefits of good governance.
The Pillars of Corporate Governance involve:
1. Transparency – is one of the primary pillars of governance. It involves the disclosure of all the important information to shareholders and board members to make informed decisions.
2. Accountability – means the willingness to take responsibility, whether the results are good or bad.
3. Fairness and equality – equitable treatment of employees and shareholders should be upheld always.
4. Responsibility – leadership in an organization shapes the values and principles that define a business culture.
In conclusion, growing companies need to engrave the four pillars of governance into their policies. Having a clear understanding and goal, good governance will enhance performance both at an individual and organizational level.